The Australian dollar ended softer today, on growing concern that China was considering tightening monetary policy to slow its rapidly growing economy.
At the local close, the dollar was trading at 97.89 US cents, down from Tuesday’s close of 99.18 cents.
Commonwealth Bank currency strategist Joseph Capurso said the local unit lost value on Wednesday as the US dollar firmed against most other currencies.He said traders were increasingly concerned that China may soon tighten monetary policy and cause a further softening of the Australian dollar.
‘‘Australia is seen as a supplier to China, so if Chinese monetary policy is tightened, the Chinese economy slows and the Australian dollar falls in response,’’ Mr Capurso said.
Stronger than expected housing finance data released on Wednesday saw the local currency trade only marginally higher.
Australian housing finance commitments for owner-occupied housing rose 1.9 per cent in October, seasonally adjusted, to 49,307, the Australian Bureau of Statistics said.
The median market forecast was for a 0.3 per cent rise in housing finance commitments in the month.
Mr Capurso said he expected the local unit to lose further ground during the offshore session, trading near 97 cents.
‘‘I think that markets will be paying close attention to the debt situation in Europe and for any comments out of any European leaders or finance ministers,’’ he said.
AAP